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Further room exist for iron ore price cut in India - Report

2017-10-12

Business Standard reported that faced with a minuscule cut in iron ore prices by NMDC, which did not match the global price decline for September, domestic players see the potential of a further cut in the price of iron ore in the near future. Senior executive of a merchant mining company said “NMDC’s iron ore price cut for October 2017 has been much lower than the global price decline of the steelmaking raw materials for September. This means there is wide room for a further price cut. But, given that domestic demand remained robust with supply being limited, the price cut may not be as sharp as seen in the global markets.”

However, Mr Sesharigi Rao, joint managing director and group chief financial officer, JSW Steel said that “NMDC is following differential iron ore pricing. The price differential between Odisha and Karnataka works out to as high as Rs 1,600 a tonne. Iron ore pricing in India is quite arbitrary. Production is highly regulated with the Supreme Court setting a maximum output target of 30 million tonnes in Karnataka. While supply is constrained, demand continues to remain robust. Thus the pricing power has shifted in favour of miners.”

The benchmark iron ore with 62 per cent Fe content reported a decline of a staggering 21.4 per cent in the global markets in September to close the month at about 61 a tonne. By contrast, however, the public sector iron ore miner NMDC cut its benchmark iron ore prices by INR 100 for lumps and fines for October. With the current price cut, iron ore lumps and fines are now quoted at Rs 2,300 a tonne and Rs 2,060 a tonne, respectively, ex mine exclusive of taxes.